Sentoria optimistic of property sales boost

KUALA LUMPUR: The property market slowdown has done nothing to hamper Sentoria Group Bhd’s prospects with the company targeting much higher property sales of RM250 million for the financial year ending Sept 30, 2016 (FY16), banking on its core strength, building affordable homes.
Its joint managing director Datuk Gan Kim Leong said its property business will in fact be able to mitigate losses in the leisure and hospitality business, attributed to the start-up costs for Bukit Gambang Resort City in Pahang as well as wet weather in the East Coast, which affects tourist numbers during the holiday season.
Over the past five years, Sentoria has registered average annual property sales of RM149 million. Sentoria is bullish on the future, with sales expected to increase to RM350 million and RM400 million in FY17 and FY18 respectively. The main drivers are its property projects in Kuching, Kuantan and Morib.
“We expect RM100 million, RM150 million and RM200 million sales from Kuantan, Kuching and Morib per year,” Gan said, noting that the company’s unbilled sales stood at RM101 million as at end-September 2015.
He even expects margins to continue to be higher than the industry average, at close to 40%, well above the “normal level” of 30%.
Gan said the company has sufficient landbank of 1,800 acres for its future development at reasonable cost, with an estimated gross development value (GDV) of RM9.8 billion. The bulk of its landbank is in Kuantan, Kuching and Sungai Petani.
Over 90% of the company’s property revenue comes from Kuantan, an area where it has a 30% market share of the houses which have been built there. The property segment contributes two-thirds of the company’s total revenue.
Meanwhile, Gan said Sentoria has allocated RM140 million in capital expenditure (capex) for its three upcoming leisure and hospitality facilities, namely Langkawi Nature Park (RM20 million), Borneo Samariang Water Park (RM40 million) and Morib Bay Water Park (RM80 million), which are slated for completion in 2016, 2017 and 2018, respectively.
He is non-committal on how soon the company can turn around the leisure and hospitality business.
However, Gan stressed that Sentoria will not stop investing in the leisure and hospitality business given the commendable earnings before interest, tax, depreciation and amortisation (ebitda) for Bukit Gambang Resort City, which could be replicated at other resort cities.
The leisure and hospitality division narrowed its losses before tax to RM6.6 million in FY15, compared with RM11.4 million in FY14.
Overall, Sentonia reported a 10.26% increase in net profit to RM32.13 million for the financial year ended Sept 30, 2015 versus RM29.14 million a year ago.